Brazil biodiesel sector calls for stronger oversight amid rising blend mandate, prices

Representatives from Brazil's biofuels, import and fuel distribution sectors have called for increased regulatory oversight and stable funding to enforce the mandatory presence of biodiesel in diesel fuel, given the recent increase in the blend, they said in an Oct. 14 committee meeting at Brazil's Chamber of Deputies.

The concerns follow the increase in the mandatory biodiesel blend in diesel to 15% from 14%, effective Aug. 1.

Platts, part of S&P Global Commodity Insights, assessed biodiesel DAP Paulinia for one-to-seven-day delivery at Real 6,387/cu m on Oct. 14, up Real 784/cu m, or 14%, from Real 5,603/cu m on July 30, before the blend increase.

The rising price of biodiesel was central to the discussion, as periods of higher cost impact from biodiesel additions tend to coincide with higher rates of fraud, Carlos Faccio, director of the Legal Fuel Institute, or ICL, said during the committee meeting.

The price difference between biodiesel and diesel in Brazil was Real 0.24/liter in August, which could become an attractive target for fraudsters if there is no strict monitoring, according to an ICL survey.

Comparatively, the added cost of biodiesel reached Real 0.28 per liter in December 2024, when monitoring was suspended and compliance with the blend dropped from a level close to 98% to 92%, according to data from Brazil's oil regulator ANP.

The ANP suspended its fuel quality monitoring program in July 2025, amid ongoing governmental budget cuts, repeating a similar suspension carried out during the final two months of 2024.

Although the monitoring resumed in August, coinciding with the increase in the biodiesel blend mandate to 15% and the ethanol blend mandate to 30% from 27.5%, large distributors were still wary of losing market share to competitors that bypass blending regulations.

Push for advanced legislation

Advanced legislation is needed to ensure oversight on biodiesel producers' electronic invoices and on projects that penalize non-compliant actors, as well as to ensure the budget for biodiesel traceability continues with existing projects, ANP director Pietro Mendes said during the committee meeting on Oct. 14.

"It is not acceptable to have an agency, whose responsibility is to oversee the fuel market in Brazil, facing financial problems," Sergio Massilon, director of Institutional Relations of the National Federation of Fuel, Gas, and Biofuel Distributors, said. "Maintaining the ANP institution with staff and guaranteed funding is essential."

Sector representatives also cited judicial interventions as a barrier to effective enforcement. Mendes said that 26 fuel distributors have secured injunctions allowing them to continue operating despite failing to meet national decarbonization targets under the RenovaBio program.

Under current rules, any company selling to a sanctioned distributor could face penalties of up to Real 500 million (approximately $90 million).

In response to the issues raised by sector representatives in the committee, Federal Deputy Alceu Moreira, President of the FPBio congressional biodiesel caucus, outlined plans to advance legislative discussions supporting Brazil's "Fuel of the Future" energy transition strategy.

"In 50 years, the Fuel of the Future will be an absolutely modern law, but it will have little functionality if the permissiveness for bribery [...] ends up corroding [the program]," Moreira said.